income taxes

Social Security If Still Working

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Social Security is a supplemental retirement income program run by the federal government. The idea is simple. While you are working, you pay money into the Social Security system in the form of FICA tax. When you retire, you get a monthly income check from the Social Security system. Social Security is full of political controversy, and we aren’t interested in that here. This is about personal finance and your actual retirement plan, not about what should or should not be according to someone. Social Security While Working Once upon a time, 65 years old was the mandatory retirement age in many fields. In addition, most people didn’t live much past 65. These days, plenty of people live long past 65 years old, and plenty of people also work long past the age of 65. This introduces some new wrinkles to the Social Security program. First, with people living longer, Social Security was paying out more benefits than it used to. So, Congress passed a law that changes the retirement age for Social Security. If you were born between 1943 and 1954, your full retirement age is 66 years old, not 65. You can start collecting Social Security retirement benefits …

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What You Need To File Your Taxes

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If you are an American, chances are you have started receiving tax forms and reports from various companies. Recently, many companies, banks, brokerages, mortgage companies, and charities have started providing tax reports and forms electronically. Ironically, you may get a notice in the mail from these entities telling you that you will get your tax documents electronically. Forms Required to File Taxes Exactly which forms you need to file your income taxes depends upon your individual tax situation. People who own their own business have more tax forms they need. Likewise, people with more deductions, or various financial vehicles such as trusts require additional documents as well. If you have any financial accounts or situations that are not “standard” you’ll need to check with an accountant or tax professional to find out what is required for you to file you taxes. Employed by an Employer If you, or you and your spouse, are not self employed, then you will need a W2 Form from your employer to file your taxes. The W2 form lists several numbers including your total wages for the year, as well as various contributions to things such as 401k plans, or cafeteria accounts, or pre-tax insurance …

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Fourth Quarter 2014

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Welcome to the fourth quarter of 2014. It’s been an interesting year so far. Let’s jump right in. First, if you own a small business, like me, your third quarter estimated tax payments are due to your buddies at the IRS by October 15. By now, you should start having a little bit of an idea how your income might go for the year. If you are doing more business than last year, consider bumping your payment to keep up with your higher income. On the other hand, if business is off, then back that withholding off a bit too. Also, if you are a small business owner and you don’t get your health insurance through a spouse or other plan, don’t forget about the Obamacare open enrollment period for 2015, which runs from November 15, 2014 to February 15, 2015. You got an extra extension into April this year while the government worked out some bugs. That won’t necessarily be the case this year, so double-check your plan, or see what the new ones are. You can go to HealthCare.gov and they’ll redirect you to your state exchange if necessary. September Jobs Number The September labor report is due …

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Capital Gains Home Sale with Home Office Depreciation

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If you have a small business, the taxes can be pretty tough to swallow. That’s why you need to be sure that you take all the tax write offs you possibly can to lower your small business tax bill. These small business tax deductions are particularly important for solo entrepreneurs and other self-employed business owners who get stuck with additional self-employment tax. For many business owners, one important tax deduction is the home office tax deduction. This deduction allows home owners who use part of their home for business purposes to write off expenses including deducting property taxes, a portion of utilities and other costs of owning and maintaining a home. How Home Office Affects Capital Gains on Home Sale When you sell property, like your home, you typically have to pay taxes on any increase in the value of the asset. These taxes are called capital gains taxes. Fortunately, these taxes are often taxed at a lower tax rate than your standard tax bracket rate. Unfortunately, on the sale of a large asset, like your home, these capital gains can still be substantial. Luckily, there is a special home sale exclusion for capital gains on the sale of your …

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Do I Need an Accountant?

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The only question I get asked more often than, do I need a financial advisor, is do I need an accountant. The answer isn’t that complicated for most people, however, as with all things money and finance, there are always some exceptions that seem to throw off the ability for anyone to give a straight answer. So, let’s start with with what an accountant does and does not do, and then move on from there. The spoiler, if you are chomping at the bit to get a quick answer, is probably not, but let’s examine the angles to be sure. What Does An Accountant Do? First of all, before deciding whether or not you need an accountant, you should probably understand what an accountant does. More importantly, you should probably understand what an accountant does not do. Now, just like other professions, there are accountants who do more than accounting. I actually know some accountants who are also financial advisors. After all, there is some merit to wrapping all of your financial needs into one little package from the same professional you already trust. But, for our purposes here, we are going to focus on just accountants. That is, do …

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Mid-Year Review 2014

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Here it is, June 2014, the middle of the year. So, what do things look like for your personal finances in 2014 at the half-way point? Let’s jump right in and find out. 2014 Taxes You’re going to pay taxes in 2014, and in every year until you die. Right now, is a good time to handle a few tax issues before the second half of 2014 gets rolling. First, use the IRS withholding calculator to see if your tax withholdings are set properly. Grab a paystub and enter your information for so far this year. Add in a best guess of your various income tax deductions, or use last year’s tax forms to make estimates. Of course, if you prefer, you can use the 2014 standard tax deduction rate as well. Either way, if you are way off on your withholdings (you’ll owe a fortune, or get a fortune back as a refund), it’s time to submit a new W4 form to your employer. Grab your nearest HR person and ask for one, or just get one from the IRS website and turn it in. You only need the bottom part and filling in the worksheet is not necessary, …

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Coming to FinanceGourmet – Personal Finance Blog

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This coming week, we have some interesting new articles for Finance Gourmet to help with frequently asked about and requested personal financial health topics. First up, as May draws to a close, June marks both the end of the second quarter, and the midpoint of the year. What kinds of things should you be aware of at this point for optimal financial health? We’ll discuss quarterly tax payments, how the markets are looking at the half way point, what things you might want to be thinking of for minimizing your taxes, and more. Next, we tackle signing up for a 529 plan, step by step. Not long ago, I wrote about how a financial planner can help keep you from getting stuck on your financial planning actions such as setting up a 529 plan. But, when you can find them, a detailed step-by-step guide to setting up financial accounts such as a 529 plan can be just as valuable. We’ll give you a detailed guide on how to open a Colorado 529 plan, including how to fill out all the Colorado 529 plan forms to set up an account. Then, we’ll look at some of the new IRS numbers that …

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What Happens If I Don’t Pay My Taxes

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Doing income taxes can be a trying time for many taxpayers. There are numerous forms to fill out, cumbersome calculations to perform, not to mention, the rules change every year. When you finally finish, you might end up owing a lot of taxes to the government. The IRS isn’t know for being forgiving, but that doesn’t stop people from wondering, what happens if I don’t pay my taxes? Failure to File Taxes First, it is important to distinguish between not filing your income taxes, failure to file, from not paying your income taxes. There are significant additional penalties for not filing your income taxes on time. If you can pay your taxes, but can’t get them done on time, then consider filing a Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax. Filing this form grants taxpayers an automatic extension of time to file. This form must be filed by the April 15th filing deadline just like a regular tax return would be. Once filed, the new deadline for filing your taxes moves to the beginning of October. Beware, even if you file for an extension, you do NOT get any additional time to pay …

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Detecting IRS Phone Scam

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The latest phone scam goes something like this: Someone calls and claims to be from the IRS. They say that you owe taxes and you need to make a payment right away. Otherwise, the scammer says, you may be deported, lose your business license, or even be arrested. This is in addition to the ongoing problems with tax fraud identity theft. How To Tell If It’s the IRS Phone Scam There are a couple of tip offs that can help you detect whether it really is the IRS on the phone. First, off, the IRS does most of this stuff by mail. Mail gives a verifiable paper trail for future legal proceedings if necessary. Also, having a computer spit out 10,000 letters is way faster, cheaper, and more efficient than calling 10,000 people. If you haven’t gotten a single letter from the IRS before you get a phone call, be very suspicious. Sometimes, the scammer gets lucky and maybe you have gotten some letters from the IRS. Maybe you didn’t understand them completely. Now, it’s time to understand how the IRS threatens people. The IRS cannot do ANYTHING at all without telling you IN WRITING that they are going to …

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What Happens If You Don’t File Your Taxes On Time

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What happens on April 15?  For those of you from non-US countries, that probably doesn’t mean much.  To us Americans, April 15th is Tax Day, the deadline to file tax returns. Yup, and entire day taken over and corrupted by government. Well, I guess those interstates won’t pave themselves for free. If you’re working at the last minute then you might be looking for last minute tax tips.  Of course, what many people really want to know is what happens if you don’t file your taxes by the deadline and is there anything I can do if I can’t get my taxes done? The answer, actually, is surprisingly benign.  Filing late is a no-no and can result in all kinds of problems, not the least of which are penalties.  But, there is a ray of hope.  Instead of filing your tax return, file for an extension.  One extension is granted automatcially, so all you have to do is send in the form.  If you can’t get your taxes done by April 15, then make sure you file your request for extension in its place to avoid penalties, fees, and interest. If you file for an extension when are your taxes due?  …

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